c$.$ Multiple IRRs can exist, but not multiple MIRRs. This is one reason some people favor the MIRR over the regular IRR.

d$.$ If a firm uses the discounted payback method with a required payback of $4$ years, then it will accept more projects than if it used a regular payback of $4$ years.

e$.$ The percentage difference between the MIRR and the IRR is equal to the project's WACC.

Q$10$: Which of the following statements is CORRECT?

a$.$ If a project with normal cash flows has an IRR greater than the WACC, the project must also have a positive NPV$.$

b$.$ If Project A$\text{'}$s IRR exceeds Project B$\text{'}$s$,$ then A must have the higher NPV$.$

c$.$ A project's MIRR can never exceed its IRR.

d$.$ If a project with normal cash flows has an IRR less than the WACC, the project must have a positive NPV$.$

e$.$ If the NPV is negative, the IRR must also be negative.

Q$11$: Which of the following statements is CORRECT?

a$.$ The IRR method appeals to some managers because it gives an estimate of the rate of return on projects rather than a dollar amount, which the NPV method provides.

b$.$ The discounted payback method eliminates all of the problems associated with the payback method.

c$.$ When evaluating independent projects, the NPV and IRR methods often yield conflicting results regarding a project's acceptability.

d$.$ To find the MIRR, we discount the TV at the IRR.

e$.$ A project's NPV profile must intersect the X$-$axis at the project's WACC.

Q$12$: Projects A and B have identical expected lives and identical initial cash outflows $($costs$).$ However, most of one project's cash flows come in the early years, while most of the other project's cash flows occur in the later years. The two NPV profiles are given below:

NPV

${\displaystyle \underset{?}{\overset{?}{}}}($$$)$